Whirlpool Shakeup In Wake Of Dim Q4
By Jeff Malester -- TWICE, 12/18/2000
BENTON HARBOR, MICH. -Confronted by conditions in the major appliance industry and the economy that have led to intensified price competition, rising costs of materials, and slowing or declining demand, Whirlpool Corp. has announced a significant lowering of fourth-quarter earnings expectations, as well as global personnel cuts.
Hand-in-hand with an overall reorganization, Whirlpool has decided to take a series of charges in 2001 designed to structurally reduce its cost base.
The restructuring-which could include as much as a 10 percent reduction in personnel worldwide (6,000 jobs), as well as a reduction and reconfiguration of Whirlpool's global operations-will result in charges of between $300 million and $350 million, said the company. In addition, Whirlpool plans to reduce SG & A costs by $100 million during the next two years.
The company, based here, said it plans to reduce operational expenses by $100 million over the next two years as part of a program to save $225 million to $250 million a year through cuts in spending and its global work force of 63,000.
"Appliance industry shipment declines in North America and a broad industry slowdown in Europe have been far more pronounced that previously forecast," said chairman/CEO David R. Whitwam. "Consequently, we now expect that our fourth-quarter 2000 earnings will approximate third-quarter 2000 levels."
Whirlpool said its North American operation is facing both a decline in the overall majap market and continuing competitive pricing pressures. Whirlpool said the North American appliance industry is expected to be down 7-8 percent in the fourth quarter, compared with the same three months in 1999. Earlier company guidance forecast a fourth-quarter decline of 2-3 percent in industry shipments.
These announced actions, said Whitwam, "will allow Whirlpool to drive continuing performance improvements and will better align our brand, products and operations with our markets globally."
Looking at 2001, Whirlpool expects a continuation of the challenging North American and European industry environment for most of the first half of the year. Positive trends should develop in the second half, said the company. For the full year, Whirlpool expects North American industry shipments to be flat vs. 2000.
Given the anticipated majap industry conditions in 2001, Whirlpool expects its performance in the first half will be lower than the first six months of 2000. However, it expects to see substantial performance improvements in the year's second half.
"As we look at the first quarter of 2001," said Whitwam, "we see a continuation of the challenging industry environment and expect that our first-quarter performance will be in line with our expected fourth-quarter 2000 performance.
"However, in subsequent quarters we expect to deliver margin expansion and improving profitability. These actions, combined with our forecast for positive economic and industry change in the second half of 2001, will allow us to drive full-year earnings improvement."
